FISCAL BLOG

As the nation continues to battle the devastating effects of the pandemic, new data from the Bureau of Economic Analysis (BEA) shows a sharp drop in the rate of economic growth at the end of last year, while the nation’s economy overall remains significantly below pre-pandemic levels.

Beginning in mid-March 2020, the Federal Reserve initiated an aggressive policy of quantitative easing — which involves the purchase of government securities, corporate bonds, and other financial instruments — with the aim of keeping interest rates low and injecting cash into the economy.

One key part of the CARES Act was the Coronavirus Relief Fund, which provided $150 billion in direct federal fiscal support to governments in states, territories, and tribal areas to cover expenditures incurred due to the COVID-19 public health emergency.

As the United States borrows a significant amount of money to respond to the COVID-19 pandemic, let’s take a closer look at a few key characteristics of Treasury borrowing that can affect its budgetary cost.

It’s important for lawmakers to consider the many available policy options for improving that outlook.